Q – In trying to assess the results of our last roadshow, my CEO wants me to try to get deeper insight into how fund managers are reading our message before we set up further meetings. What is the best way to elicit candid feedback from the buy side?
A – Investors are generally not a shy breed and are pretty vocal about their thoughts on companies, as well as the management teams they have met with after an investor meeting. However, there are instances where having an independent third party professional gauge perceptions for the company results in more objective feedback. If you have exhausted your own efforts and there is a hunger for more valuable insight, it’s time to call in some external support.
Consultants that can guarantee anonymity for their interviewees are usually considered to get the most candid and productive feedback. I have even seen cases where an investor is guaranteed anonymity but insists on being cited because he or she wants the message heard loud and clear by management.
A further avenue to consider in this area is your sell-side analysts and their respective client/corporate services group. Both can be helpful in gathering perceptions and providing recommendations based on meetings they have set up for the company.
Q – Are there any hard and fast rules about disclosing information on intangibles? We’re trying to boost our disclosure of non-financial metrics but it’s hard to know what investors and analysts want to learn.
A – As the reforms wrought by Sarbanes-Oxley have enhanced how financial information is reported, investors want to know more about the ‘softer side’ of the business: intangible items that don’t show up on a balance sheet or an income statement.
No-one disputes the value of intangibles, as well as the need to properly and consistently communicate with investors to ensure that these valuable assets are truly appreciated by Wall Street. Intangibles vary in importance from industry to industry but, in general, include: leadership, strategy, communications, brand, reputation, alliances and networks, technology, human capital, workplace/culture, innovation, intellectual capital and adaptability.
There really isn’t a hard and fast rule about reporting intangibles. Determining which ones count most at any given time, however, is critical in communicating effectively and optimizing intangibles’ contributions to your company’s valuation.
The good news is that the SEC and academia are looking at bringing some much needed insight into the topic to keep up with investor demands and the evolution of financial reporting.
